Personal Contents Inventories

Who should compile the personal contents inventory?
Can the insured do it correctly?
How can you be sure it is accurate?
Who identifies the correct replacement cost?
What is the real cost when the insured is required to generate the list?
Why is it difficult for the insured to quickly compile the list?

Some insurance companies still require the insured to compile their own detailed inventory of their personal contents because, “that it is a requirement of the policy.” Many carriers maintain that since is says so in the policy, the insured must perform this duty on their time and at their expense regardless of the end result. Adjusters working under this theory often receive vague, inaccurate, under-detailed and overstated inventory lists making it almost impossible for the claim adjuster to identify the actual replacement cost (RC) and ACV. After the claim drags on for months, the long-delayed inventory will often express, in disguise, the dissatisfaction the insured has with other aspects of the loss settlement.

For example, the insured may feel they should have been allowed to repaint the entire home instead of only a few rooms, or they feel all the carpet should be replaced instead of just a few rooms. As they work on the contents inventory list, they now decide, using “situational ethics” so common today, that they had “20” pair of jeans, (rather than the 10 pair that really existed). They may now “remember” all the high-end tools they had in the totally destroyed garage, even though the tools may have been minimal and inexpensive.

Delayed contents lists can also open the door to public adjusters who are ready, able, and more than willing to assist the insured in completing this task which the insured is ill equipped or too overwhelmed to complete.

Even for the completely honest insured, willing to comply with the demand for an accurate list, will find that the emotional ties connected with these very personal items, makes it difficult if not impossible to objectively state the attributes of each item. These emotional attachments dramatically slow the process, with the insured often postponing the project many months thereby blurring reality and truth.

When the insured has the fortitude to deal with the emotional issues, and can squeeze the time into their totally disrupted life, they still lack the expertise to correctly provide a good description of each item. With the best of intentions, a bedroom dresser described as “oak, 5 drawer” may very well be a particleboard/plastic film laminate dresser that looks like oak. Still with good intentions, they use a furniture store ad to help with pricing. Since it has been 15 years since they purchased the item, they claim $499 when it should only be $199.

Even more often, the insured will list the claimed amount for their four-year-old computer at what they paid for it - $2,500. Today that same system may well be purchased for under $1,000 (Like Kind & Quality).

With almost every carrier struggling with poor loss ratio’s, many of which are seriously bleeding red, personal contents has been identified as one of the major culprits. Losses on personal contents are often exceeding losses on the structure as we become a society with our own personal warehouses filled with the latest in technology, gadgets, collectibles, and more clothing for each of us than entire families had 20 years ago.

Often, Home Offices insist that claims offices and adjusters reduce expenses to satisfy the short term need to be profitable for stockholders, without regard (it seems) for the long term value of a useful adjusting tool. This may be a penny-wise and pound-foolish approach that prevents them from using many of the tools designed by cutting edge vendors to assist in the accurate capture and accurate pricing of contents. Often they seem more concerned about NOT paying expenses of $1,000 or 2,000, but readily overpay as much as $50,000 to the insured on an inaccurate inventory.

Quick and accurate inventory captures completed by a vendor accomplish many things:

• Quick captures – enable faster file closures
• The insured is much more cooperative the first two or three weeks after the loss
• Restoration of more items is more likely by examining and inventorying all items quickly
• A huge burden is removed from the insured – carrier is providing great customer service
• Content “creep” or overstatement is dramatically reduced by obtaining a quick, detailed inventory
• An accurate Replacement Cost can be generated using the correct, detailed attributes identified for each item
• A more accurate ACV can be accomplished since a third party (vendor) has seen and examined the item
• The carrier pays the correct amount due on contents
• The adjuster can handle more claims and handle them accurately and fairly

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